4-point Insurance Inspections – Why and when?

Most homeowners and buyers have experienced the recent volatility of the property insurance market. Inflation, rising repair and replacement costs, natural disasters, economic factors, and increasing underwriting challenges are among the factors that have driven major changes in the market. As carriers seek to limit their liability and maintain profitability, inspections have become a valuable tool to improve their understanding of the properties they insure.

Historically, insurance companies that issue policies in states that have experienced a higher exposure to natural disasters, particularly hurricanes, have utilized inspections as part of their underwriting process. Florida, Texas, Louisiana, North Carolina, and South Carolina have required what has been termed a “4-point Inspection” to mitigate their risk by ensuring that the essential components of an older home are in satisfactory condition and do not pose a high likelihood of claims due to failures or significant repairs.  

4-point insurance inspection

A 4-point Inspection is not as comprehensive as a full home inspection. It focuses solely on the four critical areas most likely to cause significant damage if they fail and are typically the most expensive to repair or replace. The components of a 4-point inspection typically include:

  1. Roof: The inspector examines the roofing materials’ age, condition, and type. They check for signs of wear, leaks, and other damage that could indicate the need for repairs or replacement.
  2. Electrical System: The inspection covers the main electrical panel, wiring, and overall electrical setup of the home. Inspectors look for outdated or unsafe wiring practices (e.g., aluminum wiring, knob-and-tube wiring), proper grounding, and potential fire hazards.
  3. Plumbing System: This includes the condition of pipes, fixtures, water heaters, and any signs of leaks or water damage. Inspectors also check the materials used in the plumbing system (e.g., polybutylene pipes, which are prone to failure).
  4. HVAC (Heating, Ventilation, and Air Conditioning): The inspector assesses the age, condition, and functionality of the heating and cooling systems, including the air conditioning unit and the furnace. They look for proper installation and any signs of damage or inefficiency.

Insurance companies typically require a 4-point insurance inspection under the following circumstances:

  1. Older Homes: Insurance companies often mandate a 4-point inspection for homes that are 25 years old or older. This helps them assess the risk associated with insuring an older property.
  2. Policy Renewal: If a homeowner is renewing their insurance policy, especially if the home has aged into the 25+ year category since the last policy was issued or renewed, a 4-point inspection may be required to ensure that the house’s major systems are still in good condition.
  3. New Insurance Policy: When obtaining a new insurance policy, especially if the home is older, the insurer may require a 4-point inspection to evaluate the condition of the home’s key systems before providing coverage.
  4. Home Purchase: Buyers of older homes might be required to get a 4-point inspection as part of the insurance process when they are purchasing the property and need to secure homeowners insurance.

The findings of a 4-point inspection help insurance companies decide whether to issue or renew a homeowner’s insurance policy and may influence the terms and premiums of the policy. If issues are found, the homeowner may be required to address them before insurance coverage can be provided or renewed. The requirement for a 4-point inspection can vary by state, insurer, and the specific details of the home and its history.

Acuity has provided its “4-point Inspection” services to numerous insurers and clients in the Omaha area. Contact us today to learn more about how we can help you and your carrier confirm the condition of your home!

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